Daron Acemoglu

Massachusetts Institute of Technology, Cambridge, Massachusetts, United States

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Publications (392)463.11 Total impact

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    ABSTRACT: To systematically study the implications of additional information about routes provided to certain users (e.g., via GPS-based route guidance systems), we introduce a new class of congestion games in which users have differing information sets about the available edges and can only use routes consisting of edges in their information set. After defining the notion of Information Constrained Wardrop Equilibrium (ICWE) for this class of congestion games and studying its basic properties, we turn to our main focus: whether additional information can be harmful (in the sense of generating greater equilibrium costs/delays). We formulate this question in the form of Informational Braess' Paradox (IBP), which extends the classic Braess' Paradox in traffic equilibria, and asks whether users receiving additional information can become worse off. We provide a comprehensive answer to this question showing that in any network in the series of linearly independent (SLI) class, which is a strict subset of series-parallel network, IBP cannot occur, and in any network that is not in the SLI class, there exists a configuration of edge-specific cost functions for which IBP will occur. In the process, we establish several properties of the SLI class of networks, which are comprised of linearly independent networks joined together. These properties include the characterization of the complement of the SLI class in terms of embedding a specific set of subgraphs, and also show that whether a graph is SLI can be determined in linear time. We further prove that the worst-case inefficiency performance of ICWE is no worse than the standard Wardrop Equilibrium with one type of users.
    No preview · Article · Jan 2016
  • Daron Acemoglu · Ufuk Akcigit · Douglas Hanley · William Kerr

    No preview · Article · Jan 2016 · Journal of Political Economy

  • No preview · Article · Nov 2015 · ACM SIGMETRICS Performance Evaluation Review
  • Daron Acemoglu
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    ABSTRACT: This study revisits the important ideas proposed by Atkinson and Stiglitz's seminal 1969 paper on technological change. After linking these ideas to the induced innovation literature of the 1960s and the more recent directed technological change literature, it explains how these three complementary but different approaches are useful in the study of a range of current research areas – though they may also yield different answers to important questions. It concludes by highlighting several important areas where these ideas can be fruitfully applied in future work.
    No preview · Article · Mar 2015 · The Economic Journal
  • Daron Acemoglu · Philippe Aghion · David Hemous
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    ABSTRACT: A key question in the economics of climate change is the importance of global policy coordination in reducing carbon emissions. In this paper, we study this question using a two-country (North–South) extension of Acemoglu et al. (2012) which introduces directed technical change into a general equilibrium model of climate change. We find that, first, the optimal policy necessarily requires global policy coordination, with the implementation of research subsidies and carbon taxes in both North and South. Second, under certain circumstances, appropriately chosen environmental regulations in the North alone can prevent the worst environmental disasters. In particular, such disasters can be prevented by a combination of carbon taxes and clean research subsidies under the restrictive conditions that (a) the two inputs are substitutable in both countries; (b) there is no international trade between the North and the South; and (c) the South imitates technologies invented in the North. Third, international trade between the North and the South typically makes it more difficult to prevent environmental disasters through unilateral policies in the North, because environmental regulation in the North may induce full specialization by the South in dirty input production, as imitation of clean technologies by the South then ceases to be profitable. Hence, given current circumstances, global policy coordination is highly desirable.
    No preview · Article · Feb 2015 · Oxford Review of Economic Policy
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    Daron Acemoglu · James A. Robinson
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    ABSTRACT: Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understanding the past or predicting the future because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality.
    Preview · Article · Feb 2015 · Journal of Economic Perspectives
  • Daron Acemoglu · Giacomo Como · Fabio Fagnani · Asuman Ozdaglar

    No preview · Article · Dec 2014 · ACM SIGMETRICS Performance Evaluation Review
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    Daron Acemoglu · Mit Simon · Johnson Mit
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    ABSTRACT: In Acemoglu and Johnson (2006, 2007), we used the "international epidemiological tran-sition"— a wave of global health innovations and improvements that began in the 1940s— to construct an instrument that can help estimate the e¤ect of life expectancy on economic per-formance. This identi…cation strategy exploited the di¤erential e¤ect of these global health interventions on countries with high levels of mortality from the a¤ected diseases. Using this strategy, we found that the instrumented changes in life expectancy have a large e¤ect on pop-ulation: a 1% increase in life expectancy leads to an increase in population of about 1.7-2%. Life expectancy has a much smaller e¤ect on total GDP. Consequently, there is no evidence that this large exogenous increase in life expectancy led to a signi…cant increase in per capita income. Bloom, Canning, and Fink (2009) argue that the Acemoglu and Johnson regressions are misspeci…ed because they do not take account of potential convergence in income per capita. Their critique is incorrect for three reasons. First, both in our published paper (2007) and, at greater length, in the NBER working paper version (2006), we addressed this issue and showed that our results are robust to various di¤erent speci…cations that allow for convergence e¤ects. Second, the speci…cations used by Bloom, Canning, and Fink do not follow from the standard model incorporating mean reversion (i.e., convergence) in income. Third, using additional checks for convergence e¤ects, we …nd no evidence that incorporating such e¤ects has any impact on our previous …ndings. In addition, there is a logical inconsistency between the Bloom, Canning, and Fink second stage and their instrument strategy.
    Preview · Article · Dec 2014 · SSRN Electronic Journal
  • Daron Acemoglu · Gino Gancia · Fabrizio Zilibotti
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    ABSTRACT: Offshoring of production can have a deep impact on the wages and welfare of workers with different abilities through its effect on technological progress. This column argues that, when labour is sufficiently cheap abroad, firms have incentives to offshore low-skill tasks and invest in skill-biased technologies at home. Over time, however, offshoring raises foreign wages. This increases demand for all firms and makes innovations complementing low-skill workers more profitable. As a result, offshoring can eventually lead to higher wages for everybody and less inequality.
    No preview · Article · Sep 2014
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    Daron Acemoglu · William B. Hawkins
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    ABSTRACT: We present a generalization of the standard random-search model of unemployment in which firms hire multiple workers and in which the hiring process is time-consuming as well as costly. We follow Stole and Zwiebel (1996a, 1996b) and assume that wages are determined by continuous bargaining between the firm and its employees. The model generates a nontrivial dispersion of firm sizes; when firms' production technologies exhibit decreasing returns to labor, it also generates wage dispersion, even when all firms and all workers are ex ante identical. We characterize the steady-state equilibrium and show that, with a suitably chosen distribution of ex ante heterogeneity across firms, it is consistent with several important stylized facts about the joint distribution of firm size, firm growth, and wages in the U.S. economy. We also conduct a numerical investigation of the out-of-steady-state dynamics of our model. We find that the responses of unemployment and of the vacancy-to-unemployment ratio to a shock to labor productivity can be somewhat more persistent than in the Mortensen–Pissarides benchmark where each firm employs a single worker.
    Preview · Article · Sep 2014 · Theoretical Economics
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    Daron Acemoglu · David Autor · David Dorn · Gordon H Hanson
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    ABSTRACT: Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable gains in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment "sag" of the 2000s is widely recognized but poorly understood. In this paper, we explore the contribution of the swift rise of import competition from China to sluggish U.S. employment growth. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that, through input-output linkages and other general equilibrium effects, it appears to have significantly suppressed overall U.S. job growth. We apply industry-level and local labor market-level approaches to estimate the size of (a) employment losses in directly exposed manufacturing industries, (b) employment effects in indirectly exposed upstream and downstream industries inside and outside manufacturing, and (c) the net effects of conventional labor reallocation, which should raise employment in non-exposed sectors, and Keynesian multipliers, which should reduce employment in non-exposed sectors. Our central estimates suggest net job losses of 2.0 to 2.4 million stemming from the rise in import competition from China over the period 1999 to 2011. The estimated employment effects are larger in magnitude at the local labor market level, consistent with local general equilibrium effects that amplify the impact of import competition.
    Full-text · Article · Aug 2014 · Journal of Labor Economics
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    ABSTRACT: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.
    Full-text · Article · Aug 2014 · SSRN Electronic Journal
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    Daron Acemoglu · David Laibson · John A. List
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    ABSTRACT: Internet-based educational resources are proliferating rapidly. One concern associated with these (potentially transformative) technological changes is that they will be disequalizing--as many technologies of the last several decades have been--creating superstar teachers and a winner-take-all education system. These important concerns notwithstanding, we contend that a major impact of web-based educational technologies will be the democratization of education: educational resources will be more equally distributed, and lower-skilled teachers will benefit. At the root of our results is the observation that skilled lecturers can only exploit their comparative advantage if other teachers complement those lectures with face-to-face instruction. This complementarity will increase the quantity and quality of face-to-face teaching services, potentially increasing the marginal product and wages of lower-skill teachers.
    Preview · Article · May 2014 · American Economic Review
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    ABSTRACT: An increasingly influential 'technological-discontinuity' paradigm suggests that IT-induced technological changes are rapidly raising productivity while making workers redundant. This paper explores the evidence for this view among the IT-using US manufacturing industries. There is some limited support for more rapid productivity growth in IT-intensive industries depending on the exact measures, though not since the late 1990s. Most challenging to this paradigm, and to our expectations, is that output contracts in IT-intensive industries relative to the rest of manufacturing. Productivity increases, when detectable, result from the even faster declines in employment.
    Full-text · Article · May 2014 · American Economic Review
  • Daron Acemoglu · Mohamed Mostagir · Asuman Ozdaglar
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    ABSTRACT: We study the simultaneous evolution of the opinion profile and network topology of a system of N agents. Based on the opinion profile at any given time, agents probabilistically decide which other agents to form links with. The probability of a link being formed with another agent depends on both similarity of their opinions and the popularity of that agent. Agents then average their opinion with the opinions of the agents they have formed links with, giving rise to a new opinion profile that determines-in a probabilistic fashion- the network topology for the next time step. Thus both opinions and network structure exhibit a strong correlation over time. Despite this correlation, we show that this system converges to a consensus in opinion. We provide simulations of convergence times and the limiting opinion profile as a function of the parameters of the system.
    No preview · Conference Paper · May 2014
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    Daron Acemoglu · Alexander Wolitzky
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    ABSTRACT: We propose a model of cycles of conflict and distrust. Overlapping generations of agents from two groups sequentially play coordination games under incomplete information about whether the other side consists of bad types who always take bad actions. Good actions may be misperceived as bad and information about past actions is limited. Conflict spirals start as a result of misperceptions but also contain the seeds of their own dissolution: Bayesian agents eventually conclude that the spiral likely started by mistake, and is thus uninformative of the opposing group's type. The agents then experiment with a good action, restarting the cycle.
    Preview · Article · Apr 2014 · American Economic Review
  • Daron Acemoglu · Mohamed Mostagir · Asuman E. Ozdaglar
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    ABSTRACT: Crowdsourcing is an emerging technology where innovation and production are sourced out to the public through an open call. At the center of crowdsourcing is a resource allocation problem: there is an abundance of workers but a scarcity of high skills, and an easy task assigned to a high-skill worker is a waste of resources. This problem is complicated by the fact that the exact difficulties of innovation tasks may not be known in advance, so tasks that require high-skill labor cannot be identified and allocated ahead of time. We show that the solution to this problem takes the form of a skill hierarchy, where tasks are first attempted by low-skill labor, and high skill workers only engage with a task if less skilled workers are unable to finish it. This hierarchy can be constructed and implemented in a decentralized manner even though neither the difficulties of the tasks nor the skills of the candidate workers are known. We provide a dynamic pricing mechanism that achieves this implementation by inducing workers to self-select into different layers. The mechanism is simple: each time a task is attempted and not finished, its price (reward upon completion) goes up.
    No preview · Article · Jan 2014 · SSRN Electronic Journal
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    ABSTRACT: We study the direct and spillover effects of local state capacity using the network of Colombian municipalities. We model the determination of local and national state capacity as a network game in which each municipality, anticipating the choices and spillovers created by other municipalities and the decisions of the national government, invests in local state capacity and the national government chooses the presence of the national state across municipalities to maximize its own payoff. We then estimate the parameters of this model using reduced-form instrumental variables techniques and structurally (using GMM, simulated GMM or maximum likelihood). To do so we exploit both the structure of the network of municipalities, which determines which municipalities create spillovers on others, and the historical roots of local state capacity as the source of exogenous variation. These historical instruments are related to the presence of colonial royal roads and local presence of the colonial state in the 18th century, factors which we argue are unrelated to current provision of public goods and prosperity except through their impact on their own and neighbors’ local state capacity. Our estimates of the effects of state presence on prosperity are large and also indicate that state capacity decisions are strategic complements across municipalities. As a result, we find that bringing all municipalities below median state capacity to the median, without taking into account equilibrium responses of other municipalities, would increase the median fraction of the population above poverty from 57% to 60%. Approximately 57% of this is due to direct effects and 43% to spillovers. However, if we take the equilibrium response of other municipalities into account, the median would instead increase to 68%, a sizable change driven by equilibrium network effects.
    No preview · Article · Jan 2014 · SSRN Electronic Journal
  • Daron Acemoglu · Ufuk Akcigit · Murat Alp Celik
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    ABSTRACT: This paper argues that openness to new, unconventional and disruptive ideas has a first-order impact on creative innovations - innovations that break new ground in terms of knowledge creation. After presenting a motivating model focusing on the choice between incremental and radical innovation, and on how managers of different ages and human capital are sorted across different types of firms, we provide cross-country, firm-level and patent-level evidence consistent with this pattern. Our measures of creative innovations proxy for innovation quality (average number of citations per patent) and creativity (fraction of superstar innovators, the likelihood of a very high number of citations, and generality of patents). Our main proxy for openness to disruption is manager age. This variable is based on the idea that only companies or societies open to such disruption will allow the young to rise up within the hierarchy. Using this proxy at the country, firm or patent level, we present robust evidence that openness to disruption is associated with more creative innovations.
    No preview · Article · Jan 2014 · SSRN Electronic Journal

  • No preview · Article · Jan 2014 · Econometrica

Publication Stats

33k Citations
463.11 Total Impact Points

Institutions

  • 1993-2015
    • Massachusetts Institute of Technology
      • Department of Economics
      Cambridge, Massachusetts, United States
  • 2012
    • Singapore Management University
      • School of Economics
      Singapore, Singapore
  • 2011
    • Tel Aviv University
      Tell Afif, Tel Aviv, Israel
    • University of Toronto
      • Department of Economics
      Toronto, Ontario, Canada
  • 2003-2011
    • Harvard University
      • Department of Economics
      Cambridge, Massachusetts, United States
    • Stanford University
      • Graduate School of Business
      Stanford, CA, United States
    • University of Wisconsin, Madison
      • Department of Economics
      Madison, MS, United States
    • Vanderbilt University
      • Department of Economics
      Nashville, MI, United States
  • 2010
    • International Monetary Fund
      Washington, Washington, D.C., United States
    • Yale University
      New Haven, Connecticut, United States
  • 2009-2010
    • CUNY Graduate Center
      New York City, New York, United States
    • Tufts University
      Бостон, Georgia, United States
    • Johns Hopkins University
      Baltimore, Maryland, United States
    • Stockholm University
      Tukholma, Stockholm, Sweden
  • 2008
    • Duke University
      Durham, North Carolina, United States
    • Texas A&M University
      • Department of Electrical and Computer Engineering
      College Station, TX, United States
  • 2007
    • Wellesley College
      • Department of Economics
      Wellesley, MA, United States
  • 2002-2006
    • University of California, Berkeley
      • Department of Economics
      Berkeley, CA, United States